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August 26th 2022

Breaking News: FCA Cracks Down on BNPL Advertising

The FCA published on Monday a letter to the CEOs of UK merchants and firms, declaring its intent to introduce stricter maintenance of advertising standards surrounding BNPL.¹

While BNPL itself is currently unregulated in the UK, any person, merchant or firm  which is inducing or inviting others to utilise it is required to follow certain rules of advertisement, and the FCA says it will now be stricter in maintaining these standards, with consequences ranging from advertisements being taken down to fines.

The letter stresses the importance of only authorised persons carrying out or signing off on financial advertisements, as well as the need to present a balanced view of the service offered, with the risks associated clearly communicated to consumers. For BNPL, this can include the risk of accumulating unpayable debt, as well as the consequences of non-repayment.

This will be particularly vital for merchants operating an own-label BNPL or finance solution, as well as any third-party BNPL providers, especially if additional friction at the checkout affects the customer experience relative to other payment methods.

While many retailers advertising third-party BNPL providers as a means of payment may be exempt from regulations in several cases,² it’s crucial that all merchants understand how to effectively implement  these regulations and the FCA’s position in detail - or risk the consequences.